SCA Budget and Governance Quiz

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Questions and Answers

Who prepares the annual budget for the SCA?

The chief executive (correct)

The deputy chief executive

The Cabinet of Ministers

The board of directors

What is the fiscal year for the SCA?

July to June

March to February

January to December (correct)

April to March

What type of entities must the markets take the form of according to Federal Law No. 4 of 2000?

Private corporations

Non-profit organizations

Sole proprietorships

Local public establishments or public joint-stock companies (correct)

Which of the following is NOT a source of income for the SCA?

Investment returns from the stock market (D) Signup and view all the answers

Who has the authority to approve the appointment of the SCA's auditors?

The board of directors (B) Signup and view all the answers

What rank does the chief executive of the SCA hold?

Undersecretary (D) Signup and view all the answers

Which regulatory requirement applies to the SCA regarding its financial operations?

It must keep regular books of account in accordance with state rules. (C) Signup and view all the answers

What is required for markets to operate at the State level?

Reciprocal and electronic linking (A) Signup and view all the answers

What is required for a meeting of the board to be considered valid?

Majority attendance including the chairman or their deputy (C) Signup and view all the answers

In what scenario can the chairman make a decision without holding a board meeting?

In exceptional cases of urgent decision-making (C) Signup and view all the answers

What role does the deputy chairman assume?

Takes the place of the chairman in their absence (B) Signup and view all the answers

How are resolutions passed during board meetings?

By majority of votes from those present (A) Signup and view all the answers

Which statement accurately describes the voting process?

Voting by proxy or by letter is not permitted (B) Signup and view all the answers

What is the responsibility of committees formed by the board?

To propose regulations to combat market fraud (D) Signup and view all the answers

What must happen to the minutes of each board meeting?

They require approval and must be signed by designated officials (C) Signup and view all the answers

Which entities are obligated to have membership in the market?

Brokers, joint-stock companies with listed securities, and any entity with listed securities. (C) Signup and view all the answers

Who is responsible for the administrative function of the SCA?

A chief executive appointed by the board (D) Signup and view all the answers

What is the purpose of the General Assembly within the market?

To monitor general conditions and suggest efficiency improvements. (A) Signup and view all the answers

How soon must the market notify the SCA after a member is entered on the register?

Within one week. (B) Signup and view all the answers

What are brokers subject to according to the provisions of the market?

Periodic inspections or inspections upon request. (A) Signup and view all the answers

How many working days per week is trading in securities required to be carried out on the market floor?

At least five days. (A) Signup and view all the answers

What document is required to formalize the powers and duties of the General Assembly?

Rules and procedures set by the market’s board of directors. (A) Signup and view all the answers

What is one of the roles of the market's board of directors?

To lay down a code of professional conduct for brokers. (C) Signup and view all the answers

How long must trading be conducted each day at a minimum?

For at least two hours. (C) Signup and view all the answers

What is one of the primary competences required of the market’s board of directors?

To appoint the market’s director general and his deputy (A) Signup and view all the answers

Which of the following is NOT a power exercised by the market’s board of directors?

Conducting legal audits for member firms (D) Signup and view all the answers

What is required for a board meeting to be valid?

A predetermined quorum specified in internal regulations (A) Signup and view all the answers

Which of the following is an objective that the board of directors is responsible for achieving?

Ensuring regular and proper functioning of the market (A) Signup and view all the answers

How can the market’s board of directors manage their responsibilities more effectively?

By establishing specialist technical organs for specific tasks (B) Signup and view all the answers

What aspect of trading must the board of directors monitor?

Justice between transacting parties (D) Signup and view all the answers

In responding to requests for listing securities in the market, what is the role of the board of directors?

To handle applications for the entering of brokers and listing of securities (C) Signup and view all the answers

What must the board of directors do to maintain transparency in the market's operations?

Present reports and data to the SCA and issue press releases (B) Signup and view all the answers

What is the primary focus of corporate governance?

Ensuring discipline in managing companies (D) Signup and view all the answers

Which authority is responsible for supervising the Corporate Governance Guide?

The Securities and Commodities Authority (C) Signup and view all the answers

When must the market provide financial statements to the SCA?

Within one month from year-end (C) Signup and view all the answers

What was the major outcome of the Board Resolution No. 03 of 2020?

Adoption of new corporate governance rules (B) Signup and view all the answers

What does the Corporate Governance Guide aim to enhance within public joint-stock companies?

Accountability, fairness, and transparency (B) Signup and view all the answers

Which of the following is NOT a recognized aspect of corporate governance?

Minimizing operational costs (D) Signup and view all the answers

What does the Corporate Governance Guide provide to companies?

A set of controls and rules (C) Signup and view all the answers

What is the significance of defining responsibilities in corporate governance?

To protect shareholders’ rights (C) Signup and view all the answers

What is the primary obligation of members of the CISI regarding the law and regulation?

Members are required to comply with both the letter and spirit of the law. (D) Signup and view all the answers

What is one of the factors that members of CISI should consider when faced with a decision?

Whether they have told any lies or half-truths. (C) Signup and view all the answers

What should members consider regarding the consequences of their actions?

Ensuring everyone affected is aware of the consequences. (C) Signup and view all the answers

Which principle emphasizes the need for members to uphold personal accountability?

Personal Accountability (D) Signup and view all the answers

What should members avoid to protect the reputation of their organization?

Any acts that could damage their organization’s reputation. (B) Signup and view all the answers

What does the principle 'Informed & Fair' require members to do?

Consider the interests of potential stakeholders when making decisions. (A) Signup and view all the answers

How should CISI members act when making decisions that affect others?

Fairly and transparently, avoiding undue advantage or disadvantage. (D) Signup and view all the answers

What is a consequence of failing to comply with CISI Principles?

Potential damage to professional relationships and reputation. (A) Signup and view all the answers

What is a requirement for markets to operate effectively at the State level?

Approval from a federal authority (D) Signup and view all the answers

Which of the following is a purpose of the Securities & Commodities Authority (SCA)?

To oversee capital market activities (A) Signup and view all the answers

What is one of the key responsibilities of the market’s board of directors?

Overseeing compliance with regulatory standards (B) Signup and view all the answers

Which statement about corporate governance is true?

It ensures transparency and accountability in management. (A) Signup and view all the answers

What is the minimum required trading duration per day on the market floor?

Six hours (C) Signup and view all the answers

Which of the following best describes the role of the General Assembly within the market?

To approve significant market decisions and strategies (D) Signup and view all the answers

What is a primary competence required of the market’s board of directors?

Understanding of legal compliance and risk management (A) Signup and view all the answers

What is required for a board meeting to be considered valid?

Presence of at least half of the board members (C) Signup and view all the answers

What is a primary objective of the Securities & Commodities Authority (SCA)?

To protect investors by establishing just dealings between market participants (C) Signup and view all the answers

Which of the following describes the financial status of the SCA?

It functions with financial and administrative independence (D) Signup and view all the answers

What is one of the ways the SCA aims to develop investment awareness?

By conducting research and reporting findings (D) Signup and view all the answers

What legal framework established the SCA in the UAE?

Federal Law No. 4 of 2000 (D) Signup and view all the answers

What is required for the licensing of securities and commodities markets in the UAE?

Licensing from the Securities & Commodities Authority (B) Signup and view all the answers

Which of the following is NOT a function of the SCA?

To produce investment reports for internal use only (C) Signup and view all the answers

How does the SCA enhance the integrity of transactions?

By ensuring prices are based on supply and demand (B) Signup and view all the answers

What is the relationship between the SCA and the Cabinet of Ministers?

The SCA reports to the Cabinet of Ministers (D) Signup and view all the answers

What is the primary responsibility of the board of directors regarding the Corporate Governance Guide?

To implement the principles and rules of corporate governance (D) Signup and view all the answers

For how long must a company maintain governance-related documents such as minutes and reports?

Ten years (B) Signup and view all the answers

What constitutes an acceptable gift for board members according to the Corporate Governance Guide?

Gifts valued at AED 500 or less (D) Signup and view all the answers

What is required from companies in relation to gifts to avoid conflicts of interest?

Gifts should not be accepted if they might influence decision-making (C) Signup and view all the answers

What should a company do in the event of a judicial lawsuit related to its documents?

Maintain the documents until the lawsuit is resolved (D) Signup and view all the answers

Which of the following is NOT a responsibility of the board of directors regarding corporate governance?

Creating new employee roles not related to governance (B) Signup and view all the answers

Which articles detail the regulations surrounding conflicts of interest?

Articles 32 & 33 (C) Signup and view all the answers

What is the intended purpose of implementing an investor relations policy?

To enhance communication with shareholders (B) Signup and view all the answers

What is required of the issuer of securities regarding the transfer of ownership?

The issuer must transfer ownership as soon as possible. (D) Signup and view all the answers

Under what circumstances can trading be temporarily suspended in the market?

In exceptional circumstances or when the market's operations are threatened. (C) Signup and view all the answers

How are the sanctions imposed on a market ranked by the SCA?

Warning, Notice to rectify, Penalty, Suspension. (A) Signup and view all the answers

What is the first step the SCA takes when a market fails to meet financial requirements?

Provide a warning specifying the violation. (C) Signup and view all the answers

What must be present for the market’s board to make decisions regarding suspending rules or regulations?

A simple majority of board members. (A) Signup and view all the answers

What must be done for securities and commodities prices according to market regulations?

Prices need to be displayed in accordance with the market’s regulations. (A) Signup and view all the answers

What happens if the SCA issues a notice to rectify a violation?

The market is given 30 days to address the violation. (B) Signup and view all the answers

What must occur for a trading suspension to be enacted within the market?

A majority of board members must be present for a decision. (B) Signup and view all the answers

What is the main function expected from firms providing 'ranking and advice'?

Category Manager or Official (B) Signup and view all the answers

Which of the following roles is NOT included in the approved jobs for financial consulting activities?

Finance Director (A) Signup and view all the answers

Which entity is NOT permitted to provide 'ranking and advice' without proper licensing?

An unaccredited financial institution (D) Signup and view all the answers

What is required from firms licensed for dealing in securities regarding their accounting system?

An electronic accounting system named 'Unified Centralised Back Office System' (D) Signup and view all the answers

Which of the following financial activities is associated with promotion according to the approved jobs?

Promotion Manager (B) Signup and view all the answers

What is the capital requirement for firms providing 'ranking and advice'?

No capital requirement (D) Signup and view all the answers

Which type of licensed body must provide an electronic accounting system for client and firm accounts?

Dealing in securities (C) Signup and view all the answers

Which professional role is specifically linked to conducting risk management in licensed firms?

Risk Management Officer (C) Signup and view all the answers

Which stakeholders are encompassed under Principle 7 - Respect Others and the Environment?

Investors and community members (C) Signup and view all the answers

What are the five licence categories established by the Securities and Commodities Authority?

Dealing in securities, investment consultancy, money lending, trading in commodities, fund management (B) Signup and view all the answers

How do the capital adequacy requirements vary across the five licence categories?

They vary based on the risk associated with the financial activities. (C) Signup and view all the answers

Which two functions are mandated for all firms across the five licence categories?

Accounting and compliance monitoring (A) Signup and view all the answers

What are the primary functions expected from a firm with a first category licence ‘dealing in securities’?

Securities trading and liquidity provision (C) Signup and view all the answers

What term refers to the accounting system required for firms providing licence category 1 services?

Accrual-based accounting system (D) Signup and view all the answers

What is one of the obligations of licensed bodies regarding their legal status?

To inform the public of their licensing by the Authority (B) Signup and view all the answers

Which article discusses the obligations concerning the state of emergency for licensed bodies?

Article 9 (B) Signup and view all the answers

Study Notes

UAE Financial Rules and Regulations

Workbook edition 4, June 2023
This workbook relates to syllabus version 4.0 and will cover exams from 10 September 2023 to 30 November 2025
Published by Chartered Institute for Securities & Investment
In association with Securities and Commodities Authority Training Centre
Reviewed by Jamal Sawalha
Is an educational workbook only. The Chartered Institute for Securities & Investment accepts no responsibility for persons undertaking trading or investments in whatever form.

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Description

Test your knowledge on the financial and governance structure of the SCA. This quiz covers the annual budget preparations, fiscal year details, and regulatory frameworks as per Federal Law No. 4 of 2000. Challenge yourself to learn about the authorities and sources of income related to the SCA.